IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 8 NO. 3 2022
DOI: https://doi.org/10.56201/ijbfr.v8.no3.2022.pg28.42

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Determinants of Commercial Bank Credits in Nigeria

Emefiele, Charles Chike, Akeh, Monica Ukongim., Stanley Chioma, Ononiwu Ethelbert & Nkamare Stephen

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Abstract

The study examined determinants of commercial bank credits in Nigeria. The specific objectives were to: examine the effect of volume of deposits, interest rate, cash reserve requirement and liquidity ratio on commercial bank credits in Nigeria. Ex-post facto research design was adopted in the study. Secondary sources of data were used as the main methods of data collection. The relevant data for this study were obtained from the Central Bank of Nigeria (CBN) statistical Bulletin. The data were collected on annual basis from 1990 to 2021. Several techniques were employed in this study to test and estimate the relevant equations. These include the unit root test, the cointegration test, granger causality test and the error correction mechanism. Based on the analysis of the study, the following findings were discovered: There was a significant effect of volume of deposits on commercial bank credits in Nigeria, there was a significant effect of interest rate on commercial bank credits in Nigeria, there was a significant effect of cash reserve requirement on commercial bank credits in Nigeria and there was a significant effect of liquidity ratio on commercial bank credits in Nigeria. Based on the findings in this study, the study recommended that commercial banks should focus on how to increase the volume of deposits so as to improve their credit facilities. Finally, Central bank of Nigeria stipulated minimum cash reserve requirement should be considerably low so as to enhance commercial bank credits to private sectors.

keywords:

Volume of deposits, commercial bank credits, interest rate, cash reserve requirement, liquidity ratio.

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